Gluskin Sheff and Associates (GS-T)

All money managers are down this year 25-35%, worse in the U.S. Only Guardian Capital has held up. These are plays on the overall market, so as markets go down, assets leave the asset managers. So, the macro has hurt GS. Last quarter, $250 million in assets left GS out of a total of $8 billion. There are worries among asset managers that more assets will leave them as investors panic in this downturn. Cheap multiple.

(Past Top Pick, Nov. 14, 2017, Up 14%) An asset management company that moves with the markets. Pays a 6% dividend plus a special annual one, totalling 7%. GS can do nothing year to year, and you'll still pocket that yield.

He likes this stock as it runs specialty hedge funds and pays special dividends. The stock trades relatively cheaply. He expects to see continued consolidation in the sector and believes this may become a target in the future. (Analysts’ price target is $18.68)

Funds outflows usually follow underperformance. Once they start typically could go for years. The other factor that affected them is the departure of PMs. They could be a takeover target (like anything on the market). Most entities in the private wealth management space are private. He doesn’t think a takeover could happen soon.

(A Top Pick Feb 15/17. Down 5%.) A midsize asset manager, and manages about $9 billion. Although it has come off its peak of a year ago, the total return kind of dampens that, because it is quite a dividend payer. Periodically pays out special dividends. Dividend yield of about 6.5%.

A long-term manager of high net worth clients, who historically has done pretty well. He would avoid the stock right now. In the last year there has been a lot of infighting. The 2 founders are suing the company. Performance numbers have not been impressive. He worries what is going to happen to their asset flows, given some of the stuff that has happened.

A cheap company, valuation wise. They often pay special dividends. There were some litigation issues with the cofounders, but that’s behind them now. There is a new CEO coming on who has taken on a 2% position in the company, and thinks he is going to do some things to help move the share price. Dividend yield of 6.4%. (Analysts’ price target is $17.)

Founded by 2 people who were geniuses in the business of managing money for high net worth families. The stock has struggled. The company makes its money by charging a fee on assets under management, but also by charging a participation fee on profits. Increasingly, high net worth families are resisting paying participation, simply because they don’t have to. Because of this, the company has difficulty in expanding its asset base and producing the kind of profits investors want to see.

A well-run asset manager. Asset managers have really lagged, and feels this is because of management fees on many of them. That doesn’t apply to this company. ETF's have lower fees and mutual funds cannot compete with them.

Just reached a settlement. She prefers wealth management through the big banks. If existing shareholders want to sell, it could probably be a candidate for a take out by one of the big banks, however, she has not heard anything about them being for sale.

Possible takeover by one of the banks? It is tough for a bank to buy this, because the culture is much more entrepreneurial than what the banks have. Also, they focus on the high net worth investor, and the banks average client size would be significantly smaller. This has not gotten back to anywhere near the $30 share price that it had in the 2014 era. Dividend yield of 5.8%.

An asset manager that operates in the high net worth space. The demographics are great. Family assets are growing more quickly than lower net worth households. Also, client relationships tend to be longer-term and stickier, due to the nature of the services offered. The stock is discounted because of long-term litigation with the founders, which is likely to get cleared up later this year. Dividend yield of 5.27%. (Analysts’ price target is $19.67.)